So would you favour scrapping copyright and instead funding all creative works formerly supported by copyright through taxation and public funds instead, like the armed forces and policing and roads you mentioned?
I think the amount of resources directed to entertainment is excessive, so I wouldn't favour the same amount of resources being supplied via taxation. I'm not opposed to some resources going to a public broadcaster or grants for entertainment or something, but I'd prefer to see more resources expended on producing useful material, like decent educational material for school curricula, procedural manuals for small businesses (how to start and run a convenience store, takeaway shop, or whatever), manuals/tutorials for free software, free software itself (static checking source code, online collaboration), etc.
Policy changes should be progressively phased in, to avoid disruption, and ensure they're working as intended. I think reducing the copyright term to 20 years, and rolling back other measures, would be a reasonable start. I'm concerned that cloud computing may lead to a similar monopoly situation that we've had with MS Windows, so I think it would make sense to allow AGPL-like copyleft provisions for longer than copyright generally.
How is the money then to be allocated? Who decides what works are worth and which ones to support, if it is not to be done through the people enjoying those works choosing where to spend their money?
Ratings or appointed executives maybe. I expect something would work, but if it really turns out to be impossible, then scrap it. I don't see it as having a legitimate place as a high government priority.
By whichever measure you like.
No system before copyright has resulted in anything close to the quality or quantity of works being produced and distributed that we see today. The copyright-based economics of creative work demonstrably produce billions' worth of new creative work every year and allow millions to work in creative industries with a viable level of compensation.
No system before copyright has resulted in anything close to the amount of resources being consumed in the production of entertainment that we see today, so it's not at all clear to me that copyright is more efficient than other systems. Creating jobs is not a virtue. The government could create jobs by employing people to carry rocks from one end of a field to the other and back.